Comment by snidane | Hacker News Reader

Comment by snidane | Hacker News Reader

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'Land ownership' actually means 'rights for exclusive use of land'. Government owns the land but gives out rights to use to people. If oil deposit or gold mine is found on it, the right is often revoked after compensating the rights holder.

The prices for rights of use are determined by market, but usually bundled together with prices of buildings on it.

One way to look at Georgist critique of current land system is that the rights of use are sold once but held infinitely long. If you got lucky and bought a piece of land in downtown Manhattan 200 years ago for 20 bucks, now you wouldn't need to pay anyone for granting you that ownership right. Basically land (and natural resources) are owned by people who got lucky, not by people who actually use it (such as a restaurant which has to rent it from that lucky holder). If the ownership rights were not given for infinite amount of time but reentered into an auction every, say 7 years, the allocation of land would then go to people who actually need it. It is the same economical problem as Domain Name allocation on web.

People 'own' land on paper only. The government actually owns it no matter if you are in China, Europe or United States.

I like the auction aspect the parent described in another comment. However I don't like the idea that the government can revoke at will and eminent domain you out of property even if you paid the tax you won at auction. For example -- what incentivizes people to take their expensive expertise, time and equipment and survey land before placing a bid at auction? If the government is going to be the only one to survey land, that's a great way to kill innovation in the field of natural resource exploration.

Similarly, if you "bought" a piece of land you just use for a single story home near downtown SF 30 years ago, are you still paying the same LVT you got at action back then? Or will the price keep going up and price you out of your longtime house?

Yes, many people are not comfortable about being evicted.

In reality that is how majority of people and business operate because they rent from somebody else. Your apartment lease usually expires after a year and you can be 'evicted' by your landlord. Businesess have contracts for longer periods (about 10years) of time because they put more investment into it.

Instead of renting from lucky private landowners, the business owners could just as easily lease from a government for 7 years.

The only question really is how long the auction should repeat after. Every year would mean people would not invest much for risk of non renewal of the contract next year. On the other hand too long between auctions (such as infinite time like in present day situation) and you get huge underutilization because the lucky winner in the first auction is not pressured to sell.

LVT (or this auction mechanism) is based on market price of the land in that area so it changes in time. To prevent sudden spikes in price, the valuation of land should happen in intervals of several years like I described above in the case of an auction.

I would consider “ability to be evicted” to be a great moral wrong, and that access to comfortable housing that doesn’t cause an unreasonable commute to be a basic human right on par with free medical care & education.

It’s hard for me to think of a way to square this without a concept of land ownership and exclusive property rights.

I guess some type of lifelong lease from the government could be OK, but some land is more valuable than other land for living, so then how to allocate the best livable land?

At any rate, I do view the capability to be evicted as a moral wrong.

> I would consider “ability to be evicted” to be a great moral wrong, and that access to comfortable housing that doesn’t cause an unreasonable commute to be a basic human right on par with free medical care & education.

These two ideals of yours are contradictory. The right to not be evicted (in order to better develop the land) can directly prevent the availability of housing with the qualities you require. With the help of zoning boards, which are really just an embodiment of their constituent land owners, isn't this more or less the sum of the housing issue in the bay area? You certainly cannot say that there's any semblance of comfortable hosting with a reasonable commute...

I agree with you that it’s two contradictory forces, and yet I still believe either outcome is wrong. If a person can be evicted from where they live, that is wrong. Yet also if comfortable, nearby, affordable housing (that you did not need to evict others to build) is not widespread for all, that is also wrong.

It’s important to focus on solutions that solve both sides of the problem, and to deny arguments that it’s functionally not possible (which would be an unacceptable outcome).

I don’t mind the contradictory positions in terms of market theory and efficient allocation, and believe it’s important to pursue anyway, that this technical contradiction is fine... necessary even.

The impossibility may be "unacceptable" but it's reality. I believe that at a certain point - e.g. when evicting one means 1000 or 10000 more people are able to afford somewhere decent to live near where they work - eviction becomes a lesser evil. If you're unwilling to make that kind of trade, then however much sophistry you put into "focusing on solutions that solve both sides", more likely you'll just end up never getting those 1000 or 10000 people a place to live.

> which would be an unacceptable outcome

an outcome can be unacceptable, but you have no choice but to accept it. It's like gravity will pull down, whether you accept it or not.

When you lose the ability to evict, you also lose the ability to rebuild (since you'd need to evict to rebuild).

What is desirable is balance. Where that balance lies is up to the populous, and in san fran, the populous have spoken (by their actions) - they prefer to keep it less dense, and suffer the consequences of high property prices.

I too would love to guarantee to every citizen that they will not be evicted.

Unfortunately it cannot be a universal benefit since not everybody lives in their own. Implementing this non-eviction right would vastly benefit one part of the society at the expense of the other. The benefiting half of society would then proceed to collect vast sums of money from the other half through rent payments.

I personally think if there is a class divide in society then it is exactly because of this supposedly universal 'moral good'.

If Marx lived couple more decades he would see that those capitalists used their hard earned money to buy.. real estate and land. Therefore just becoming new aristocracy displacing the old one. It was not the Marx's capitalist who was the exploiting bad guy. It was the landowner after all. Industrial revolution during Marx era was just a transition of aristocratic titles to the new generation of aristocrats that we now call.. well we call them just 'billionaires'.

why is eviction so bad? provided the person has the resources to move and is given enough notice, I fail to see what is so morally wrong about it. it can certainly be inconvenient and/or disappointing, but it's hardly a heinous evil.

the expectation to live on a specific piece of land indefinitely has always seemed one of the more bizarre entitlements to me. it's basically the only thing we can't make more of.

With a lifelong auction for individuals, perhaps with an agreed upon inflation agreement (which can also be bid in the auction) and a sufficiently long auction cycle for big corporate projects to be worth doing (50 years?), I could see this being feasible. I still don't see a way to condone eviction outside of this period, just because the new land renter A. happened upon unexpected value on the land or B. had more insight to identify the value than other auctioneers. And even with a 50 year cycle, if a business builds a business specific factory, this cycle would discourage more investment into the factory near the end of the "lease" and encourage wastefully leasing some new land and building a new factory on it. There are a lot of theoretical challenges with Georgism, and combined with the impossibility of stripping all existing landowners of their property, it's all just a theoretical exercise. Still an interesting thought experiment though, and could be worth exploring if science opens up new land to divvy up (e.g. on Mars).

To the example of factory and 50 year cycle of auction and potential eviction.

If noone else wished to take over the land on which the factory stood, well then the factory owner renews the lease for another 50 years.

If there was somebody who wished to own that land and offered higher price, well they'd win the auction. However they wouldn't suddenly own the factory. They would still have to pay the price of the factory to the previous owner, much like it is done today.

If they didn't want the factory, only the land under it, and they won the auction but didn't pay for the factory, then that would result in a deadlock situation.

The original factory owner would stop production, but the new owner would be prevented from using it either, but would be stuck with the rent payments for the land under the factory.

Most likely he would sell it back to the previous owner or just not bid for it in the first place.

Only if he really wanted it that much that he would pay for the land rent to the government and price of the factory to the previous owner, he would get it.

And that is pretty much how it works today, so nothing really would change.

How many 50-year-old factories are still operating and making the same thing? My guess is hardly any, and those that are are have likely replaced the majority of their equipment by value, probably multiple times over. You'd be able to plan for the 50 year cycle and align equipment lifetimes etc. with that (whereas currently we see blighted areas because a major rebuilding project is planned someday, but there's no clarity about when); yes the factory owners would be encouraged to wind down their equipment and be prepared to move out if it turned out their land could be put to better use a different way, that's kind of the point. If the cost of moving to a new factory is higher than what someone else could gain by using the land differently, that ought to be reflected in their bids for the land.

> There are a lot of theoretical challenges with Georgism, and combined with the impossibility of stripping all existing landowners of their property, it's all just a theoretical exercise.

While the specific auction mechanism and expropriation of all land is obviously fantasy, substantiatively the same effect can be obtained with property taxes assessed based only on the value of the underlying land and updated frequently (land value tax), with the added benefit of avoiding the distortions of worrying that a lease will expire and someone will outbid you to seize the value of the capital you have invested in improving the property.

The comment you are replying to suggested that 7-year leases could be auctioned. A lease cannot be revoked “at will.” But it does mean that people can be priced out of their homes when the lease expires. That’s the point.

Coincidentally, this is similar to the lease-hold system in Hong Kong. Most land plots revert to the government after a 75 or 99 year lease term. You can sublet land during that period, but whoever directly holds the government lease is obligated to pay an annual tax equal to a percentage of the land's rated value.

>Or will the price keep going up and price you out of your longtime house?

If we don't have a problem with elderly renters getting priced out and not receiving a windfall (public concern for this issue is pretty muted) I don't see why homeowners getting priced out and receiving a windfall is worse.

I always found it deeply ironic that the Howard Jarvis Taxpayers foundation successfully lobbied for prop 13 on the "won't think of the pensioners homeowners" argument and then turned around and lobbied to slash pensions... yet their propaganda still carries weight today.

If you read the stuff Howard Jarvis Taxpayers Association puts out it's mostly "taxation is theft!!1" and starving the beast. I don't believe that people are still buying the whole thing about poor old grandma since it's very easy to make laws specific to them, cf. https://www.cga.ct.gov/2000/rpt/2000-R-0836.htm

> Similarly, if you "bought" a piece of land you just use for a single story home near downtown SF 30 years ago, are you still paying the same LVT you got at action back then? Or will the price keep going up and price you out of your longtime house?

The entire point is for the price to keep going up and to eventually price people out of their longtime homes. It is the specific intent of this sort of policy to force people out of their single story homes near downtown SF. Whether you think it's good policy or bad policy can be debated, but proponents of these sorts of policies consider it bad public policy to allow scarce resources to be monopolized by people using them inefficiently, regardless of who those people are or how they came to possess those scarce resources.

In this system people would not have a lot of incentive to keep improving the land. Still I can see some value in it, but there needs to be a away to feel that ownership and having value in taking care of the land.

I'm not an expert, but my understanding is that Georgists often do not advocate literally reselling the land every so many years. Rather they advocate that the value of the land be evaluated periodically and used to set a 100% property tax on that value. However, improvements to the land are not factored into the valuation. The idea then is that the owner can turn a profit by improving the land but not by simply owning the land as is.

Over the long run, does that end up being much different than typical US property taxes? I think the US typical house pays prop taxes every year based on land + improvements. Wouldn’t this be even less of a tax?

It would be a very high tax for the Los Angeles County Club. It would be a comparably low tax for 432 Park.

The intention of a land value tax (as this is called) is to zero out the component of property taxes based on improvements, but increase the component based on the value of the land itself. Whether this ended up being an increase or decrease in the tax rate would mostly depend on how improved the land was. If the land is very improved, this should end up being a reduction in taxes, and for mostly unimproved land it would be an increase in taxes. The intention is to encourage people who own unimproved land to either improve it or sell it to someone who will.

https://en.wikipedia.org/wiki/Land_value_tax

> improvements to the land are not factored into the valuation.

but what is the value of the land if it's not the improvements upon the land?

If i left the land wild and free and un-used, what would the the value? Is it the value someone else would've paid?

> but what is the value of the land if it's not the improvements upon the land?

Following this line of reasoning would suggest that all unimproved land is always worthless, which is obviously not true given that people buy unimproved land all the time. Moreover, it would suggest that knocking down a building on a piece of land is never a correct decision, since land with a building on it would always be worth more than that same land with the building removed, which is also obviously not the case.

> Is it the value someone else would've paid?

Yup, the market value of the land were it unimproved. There are various ways to estimate this value.

> ... would suggest that all unimproved land is always worthless, which is obviously not true given that people buy unimproved land all the time.

The problem is what counts as an "improvement". LVT proponents tend to go with the technical/legal definition, which is basically permanent structures built on the property, and consider everything else which contributes to the market value of the property to be part of the "unimproved" value. However, that "unimproved" value was still created by human beings, not an inherent part of the land. Some or all of that "unimproved" value may even be due to the efforts of the owner of the land, without involving any structures on the land itself.

To illustrate, let's say a developer buys some vacant land and, after reserving space for residential lots, adds roads, electricity, water, sewer, communications, convenience stores, etc. Those residential lots are now worth quite a bit more than the original land, despite having no "improvements" as yet. That increase in value is 100% due to the efforts of the developer, and yet a LVT would call it "unearned" and attempt to tax it away. Where is the fairness in that?

> but what is the value of the land if it's not the improvements upon the land?

Location.

A free and un-used plot in SF is worth a lot.

> A free and un-used plot in SF is worth a lot.

but the value (including the location) only exists if the eventual goal of adding improvement to the land is possible (or is doable). If i stipulate that the land is forever unused (e.g., i contaminated it with poison which cannot be removed), then the land would become worthless, regardless of the location!

Yes, that is true. However that's not what Georgists have in mind.

They care about what a currently empty lot (perhaps with necessary building permissions) fetches on the market.

Even today land is hardly valued for what sits on it. A typical 500k house in LA is a 50k bungalow sitting on 450k of dirt.

Isn't property tax trying to solve that issue?

Yes, but property tax is also levied on improvements, which creates a disincentive to develop primo land.

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